FHA Loan


FHA Loan

An FHA Loan, which stands for a Federal Housing Administration Loan, is administrated by lenders, but backed by the federal government. The FHA-insured loans encourage lenders to extend credit to borrowers who might not qualify for conventional home loans. 

Pros:

  1. 3.5% down payment minimum
  2. Allows buyers who may not qualify for a home loan to obtain one low down payment
  3. Sell can pay all of the closing costs and prepaids up to 6% of the sales prices as part of the negotiations of the contract
  4. Interest rates are typically less than conventional loan
  5. More flexible in credit and past financial history

Cons:

  1. Lifetime monthly MIP
  2. Upfront MIP fee that is rolled into the noteMonthly
  3. Monthly MIP is higher than conventional loan
  4. Size of the loan could be limited

 

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